Another casualty to Gov Bobby Jindal’s drive to privatize Louisiana

BATON ROUGE (CNS)—Chalk up another casualty to Gov Bobby Jindal’s drive to privatize.

It was one year ago on July 1 that F.A. Richard & Associates (FARA) began its phased-in takeover of the Louisiana Office of Risk Management under a contract whereby the state was to have paid FARA an amount “not to exceed $68,119,710” to assume operations of the agency. Normally, we would round that off to $68.1 million in the interest of brevity but the reason we don’t here will become evident soon enough.

Approximately 10 months later ORM and FARA came before the House Appropriations Committee to explain the Division of Administration’s approval of a contract amendment of $6,811,971, bring the new contract total to “a maximum amount of $74,930,868.

For those adept at math, that equates to precisely 10 percent of the original contract amount. ORM Assistant Director Patti Gonzales, when questioned as to why approval of the Appropriations Committee was not sought for the amendment, informed members that The Office of Contractual Review may approve a one-time amendment of up to 10 percent without committee approval.

That was bad enough, but then Gonzales let slip that it was anticipated that only about $2 million of that $6.8 million amended amount would actually be spent.

Apparently no one on the committee had the presence of mind to ask why the contract would be amended by $6.8 million if only $2 million was to be spent. The answer became apparent a week later when it was learned that FARA had been bought by an Ohio company named Avizent.

Could it be that $6.8 million amendment bolstered FARA’s bottom line sufficiently to make the company more attractive to Avizent?

Better yet, why did ORM Director Bud Thompson and FARA CEO Todd Richard sit in that committee hearing with Gonzales and never open their mouths about the pending sale that had obviously been in the works for weeks, if not months? With another $6.8 million at stake, lawmakers deserved to know that.

A plea of confidential negotiations is a cop-out. By the time of that hearing, the sale was all but final, needing only the extra $6.8 million to sweeten the deal.

Avizent has 35 offices in 25 states but its Baton Rouge office had only one employee at the time of the purchase of FARA.

That employee was Ramsey Horn, a claims adjuster with both adjusting and supervisory experience dating back 19 years to when he was originally employed by ORM in 1992.

On several occasions, Horn informed Avizent’s home office that he needed more personnel in the Baton Rouge office to assist him with the office workload. His pleas went unanswered. On Thursday, one day before the one-year anniversary of FARA’s takeover of ORM, Horn was sacked.

No reason was given for Horn’s being given his walking papers other than the pending merger of FARA with Avizent. In short, his salary, likely higher than those being offered incoming ORM employees, was a distraction the new owners didn’t need. After all, why pay Horn X dollars when he can be replaced by an incoming ORM adjuster at X minus 15 or 20 percent?

Perhaps FARA and/or Avizent were listening when Jindal said state to “do more with less.” Perhaps they wish to carry that philosophy over into the private sector. After all, with two years of frozen salaries, the Jindal administration has certainly made the idea work in the public sector.

With more of ORM’s coverage lines due to be taken over by FARA/Avizent, it would seem there would be a need for more, not fewer, employees to efficiently make the transition.

But, if one adheres to the administration mantra of doing more with less and doing it without salary increases for two consecutive years, perhaps Ramsey Horn was simply expendable.